How open finance and blockchain transform the customer experience - Stefanini

How Open Finance And Blockchain Transform The Customer Experience

In order to improve the efficiency and transparency of operations, especially when it comes to the customer experience, financial institutions are increasingly exploring the use of blockchain and the concept of open finance.

Open finance involves collaboration between financial institutions and financial service providers, in order to offer customers a wide range of solutions. Blockchain technology can facilitate interoperability between different systems and enable the secure exchange of information between different participants in the sector.

According to the Febraban Banking Technology Survey 2023, the total budget of Brazilian banks earmarked for technology is projected to reach R$45.1 billion this year – a 29% increase compared to 2022 (R$34.9 billion). Among the aspects reinforced by the institutions that took part in the study is the prioritization of personalization in customer relations and greater efficiency in data exploration and analysis.

The fact is, however, that banking operations and interactions are becoming increasingly digitalized. Communications are massive and automated, yet nobody wants to be treated like just another consumer. This common scenario shows the importance of offering exceptional experiences to your audience, as well as products, services, and interactions that are in line with expectations, through data analysis.

Let’s look at the importance of the blockchain and open finance approaches in regards to understanding people’s wants and needs.

The role of blockchain in the customer experience

This technology offers a secure and transparent system for storing and transmitting reliable information. In this way, it provides faster and cheaper payments, better traceability, and easier access to financial services, improving the customization of solutions. Some of Latin America’s leading institutions use this approach to monitor transactions, gain insights, improve decision-making, streamline processes, and better understand their customers’ needs. This is the case with banks such as Santander and Itaú Unibanco (Brazil), Banco Estado (Chile) and Banco de Crédito del Perú (BCP).

Data security and integrity: Blockchain provides an additional layer of security and ensures that data is not easily tampered with or corrupted; an essential feature for the development of financial services due to the authenticity and accuracy of the information analyzed.

Transparency and traceability: This technology allows for the transparent recording of all operations and makes it easier to follow the history of a given asset or transaction. It is a valuable resource for financial analysis because it provides a more complete view of the flow of resources and the interactions between the different involved parties. It also allows consumers to check movements themselves, thereby increasing their confidence.

Efficiency and reduction of intermediaries: Without the need for intermediaries, and with considerable cost-saving, financial processes are faster and more streamlined. In addition, process automation through blockchain-based smart contracts eliminates the need for manual data reconciliation, reducing errors and delays. In other words, making transactions faster and more efficient, with lower fees and charges, improves the customer experience.

Personalization and controlled access to data: Customers control their data and determine who can access it. This makes it possible to offer personalized experiences by allowing the selective exchange of information with banks and financial organizations. Consequently, this facilitates the development of offers more tailored to consumers’ individual demands.

Loyalty and rewards programs: With the development of loyalty programs based on tokens, (in which points can be accumulated and exchanged for prizes,) the consumer experience becomes more attractive by being more rewarding. Technology also allows greater efficiency in the management of this type of action, as well as ensuring a simpler and transparent redemption process.

Open Finance for personalization and customer experience

By allowing the exchange of information between different institutions, open finance plays an important role in this respect, as they can agree to combine their bank accounts, investments, credit cards, and other products on a single platform. This gives them a complete, real-time view of their finances, as well as a better understanding of their positions and expenses. This collected data also allows financial service providers to format more personalized services and recommendations.

This is actually an evolution of open finance, which has been given a broader name to encompass more than just traditional financial products. It now involves data on foreign exchange, credentials, investments, insurance, and pensions- among others.

As banks and organizations can now offer products and services more in line with their audience’s desires, this feature allows for a more complete view of customer needs. Another important aspect is that understanding consumer behavior, based on their history, enables more assertive and secure decision-making when releasing funds, as well as reducing the risk of default.

Open finance offers numerous possibilities. For example, the analysis of shared data will make it possible to offer financial advice and management to consumers (some institutions already offer this). This can evolve into services linked to the customer’s interest in acquiring goods such as smartphones, cars, or houses, as a few examples. Taking into account aspects such as financial situations, investments, obligations, and inflows of funds- among other useful information- it becomes possible to compose an offer that can fulfill these desires.

It is also worth noting that, according to the Open Banking Excellence (OBE) report, carried out in partnership with the University of Oxford, Brazil is on course to become the biggest success story in open finance in the world and should soon surpass the United Kingdom, a pioneer in the field. In addition to Brazil, Latin American countries, such as Mexico and Colombia, already have regulations on the subject, while Chile, Argentina and Peru are moving toward implementing a regulatory system as soon as possible.

An important reflection

These trends point to the development of even more digital (and at the same time more personal) journeys to add quality and relevance to consumer interactions. In other words, these approaches are more oriented towards their profile and mentality, rather than merely focusing on the availability of products. After all, banks and financial institutions must offer a single vision across all their systems and channels. In this sense, Topaz’s solutions make it possible to build experiences that meet these expectations at every stage of the customer journey.

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